Capital invistment apprisals Essay Example | Topics and Well Written Essays - 750 words

Capital invistment apprisals - Essay Example There are 5 techniques that have been employed in this particular scenario: simple payback method; accounting rate of return (ARR); net present value (NPV); and internal rate of return (IRR) (Mott, 1997). Capital Investment Appraisal Capital investment appraisal is the evaluation of the attractiveness and viability of an investment proposal, using techniques like payback period; net present value (NPV); average rate of return (ARR); or internal rate of return (IRR) (Go?tze, Northcott & Schuster, 2008). Investment appraisal is an essential part of capital budgeting and is relevant in cases where the returns cannot be easily quantified (e.g. training, marketing, and personnel). All businesses need fixed assets (capital equipment) like vehicles, premises, and machinery. The acquisition of those assets is called capital investment. Just like other business activities, capital investment comes with an element of risk and uncertainty, because costs are incurred today so as to generate some benefits in the future (Harrison, 2003). Capital investment appraisal techniques are aimed at enhancing and supporting decision making on such investment undertakings. The Appraisal Techniques i) Payback Period Method This technique is based on the time needed for the forecasted net cash flows to equal the amount of capital that has been invested in a potential investment initiative (Mott, 1997). The investment project that repays whatever capital invested in the least possible time is considered to be the most attractive (Gardner, 1998). This technique requires the following estimates: (a) amount of capital needed, and (b) the timing and amount of the net cash flows an investment generates. Advantages a) Simple to compute and easy to understand b) Suitable for risky projects where it is difficult to predict future cash flows beyond the first couple of years (for instance, IT). c) Suitable if short term cash flows are more critical to the survival of an investment than long-term ca sh flows. d) Suitable when there is a concern regarding gearing or borrowing. Disadvantages a) Does not factor in the time value of money (cash now is often more valuable than cash received later). b) Disregards cash flows when the payback period elapses. ii) Accounting Rate of Return While the payback period method concentrates on cash flows, the ARR concentrates on profit. It measures the forecasted average profit before tax and interest as a percentage of the average capital invested in a business venture. Advantages a) Simple to compute and easy to understand b) Caters for the entire life of an investment c) Compatible with ROCE and the performance ratio Disadvantages a) Does not account for the time value of money b) Does not offer guidance on what is a good rate of return c) Averages can be confusing and misleading d) Disregards the timing of profits e) No uniform definition of terms iii) Net Present Value This is the present value of all the present and future cash flows of a n investment, discounted at those cash flows’ opportunity cost. Advantages a) Accounts for effects of inflation b) Adjust future cash flows to a PV (present value) Disadvantages a) Inflation is usually unpredictable b) The longer you go into the future the less reliable the discount

Legal framework governing environmental regulation of the oil and gas Essay

Legal framework governing environmental regulation of the oil and gas industry - Essay Example The paper tells that the constant need for energy in the modern world has made the offshore oil and gas industry a vital one for society. Without oil and gas, commerce will grind to a halt and daily life will be irreparably changed. A future without oil and gas is difficult to imagine. And yet, the oil and gas industry are also responsible for some of the biggest environmental disasters that the world has known, making it imperative to set up stringent regulations to ensure that environmental catastrophes and adverse ecological consequences are prevented, or at least mitigated. It then becomes necessary to balance these two sometimes competing interests and craft a regulatory framework that will take into account industry imperatives of the oil and gas sector, whilst at the same time ensuring that resource sustainability issues are adequately addressed. This balancing act, however, is not so easily done. Environmentalists argue that the environmental regulations are not enough and th at companies can still routinely flout the prohibitions, causing long-term damage to the planet. On the other hand, industry players say that the restrictions are too heavy-handed, thus unduly curtailing their business. It is in light of this that this paper evaluates the legal framework – international treaties, EU directives, national legislation – of the UK. The objective of this paper is to determine whether or not this is a case of â€Å"over-regulation† or â€Å"under-regulation†.... The Offshore Oil and Gas Industry and the Planet Experts have identified the three major environmental problems caused by the oil and gas industry to be air pollution, acid rain and global warming. These problems are found in the entire production chain, from manufacture to distribution to consumption of the oil and gas. According to Gao: environmental problems start right away with exploration activities such as seismic   surveys and geological prospecting, albeit the environmental interference and disturbance at this stage are limited. Second, it is interesting to observe that, in the upstream operations, environmental problems and their impacts tend to increase and build up along with the project's progress, from the initial visibility and acoustic issues at the exploration phase, accidental spills and blow-out at the development stage, and to operational discharge and emissions such as gas flaring during the production period1.   This is because of the precarious nature of oi l and gas extraction and emission. The problem is also political because many of these offshore oil and gas extractions take place in the developing world, where vulnerable communities are hard put to defend their resources from external influences, thus jeopardising the sustainability of these resources and availability for their own consumption. Without regulation, what the world will have in its hands is a veritable time bomb – ticking and waiting to explode. Legal framework of the offshore oil and gas industry The legal framework of the offshore oil and gas industry in the United Kingdom is composed of several components. The primary international treaties that govern offshore operations are the MARPOL (73/78) which is made to apply to Merchant

HRM Essay Example | Topics and Well Written Essays - 500 words - 1

HRM - Essay Example Therefore, HR team needs to focus attention when a job needs to be redesigned. Training and development are the key issues in HR activities. HR team of R. R. Donnelley used training and development method to enhance the productivity. This HR activity also motivates and inspires the employees of Donnelley to work more and generate more production. Quality control and quality checking are also important for a production firm like Donnelley. Six-Sigma and other quality control process has been largely used in their training method. HR team also introduces new technologies in making printing plates and films. It changes the job description of the employees of Donnelley. Training and development from HR team train their employees to adopt new technology. As a result, productivity has increased by 20 percent in last three years. This increment in production also stops to build a new production unit. Therefore, this HR activity is cost effective for Donnelley and increases the efficiency an d effectiveness of the employees. (Mathis and Jackson, 160-164; R.R Donnelley, Delivering Value across the Supply Chain, p.1) Technology involves almost every part of our lives. However, to the extent that our individual lives have been transformed, the business world has developed almost beyond appreciation in the past few decades. Caterpillar is the renowned infrastructure company in the world. Caterpillar is the biggest constructer of construction and mining equipment. In Caterpillar, adoption of new technology is very common. In Caterpillar, we resolve the difficult environmental problem by new technology. Caterpillar has a good record as a technology direction. Caterpillar always used new and advanced technologies to meet their customer’s needs. As an infrastructure company Caterpillar has to use different technologies regarding environmental problems. They adopt many